Revenue and Sales Performance - In 2024, revenue breakdown by product lines: Novelty Products accounted for 64%, Flexible Film Products for 5%, and Balloon-inspired gifts and Other Products for 31%[20]. - The Company reported consolidated net sales of $17,953,000 for the year ended December 31, 2024, representing a 1% increase from $17,804,000 in 2023[122]. - Sales of foil balloons decreased by 3% to $11,510,000 in 2024 from $11,885,000 in 2023, attributed to normal fluctuations in order flow[123]. - Sales of film products decreased by 9% to $847,000 in 2024 from $927,000 in 2023, impacted by industry consolidation and competition[123]. - Sales of other products increased by 12% to $5,596,000 in 2024 from $4,992,000 in 2023, driven by larger holiday orders and new everyday offerings[124]. Product Development and Innovation - The company expanded its product offerings to include compostable materials aimed at replacing single-use plastics, with shareholder approval for a name change to include "Green" in August 2023[13]. - Management has focused on growth and profitability within core product lines, particularly foil balloons, while leveraging advancements in compostable materials from associated companies[22]. - The company aims to develop new products and improve existing ones through research and innovation within its core product categories[22]. - The company spent approximately $200,000 on research and development activities for both fiscal years ended December 31, 2024 and 2023[55]. Financial Position and Performance - The company experienced significant fluctuations in raw material costs, which have materially affected profitability[45]. - The price of helium, a key input for foil balloons, increased dramatically beginning February 2022, negatively impacting revenue by several million dollars from May 2022 through the end of 2023[66]. - Cost of sales decreased by 1.33% to $14,352,000 in 2024 compared to $14,546,000 in 2023, despite a slight increase in sales[125]. - General and administrative expenses increased by 13% to $3,396,000 in 2024 from $2,995,000 in 2023, primarily due to higher audit fees[126]. - The Company incurred net interest expense of $862,000 in 2024, up from $628,000 in 2023[128]. - Cash used in operating activities amounted to $1,274,000 in 2024, compared to $1,222,000 in 2023[129]. - The Company had a cumulative net loss of approximately $26 million as of December 31, 2024, with only $0.2 million in cash available[131]. Operational Challenges - The company has faced supply chain disruptions and inflationary pressures since 2021, affecting its ability to fulfill customer demands[62]. - The company has introduced automation features in production lines since 2022 to mitigate rising labor costs[57]. - The company is subject to competitive pressures from well-established manufacturers in the balloon and novelty industry, which may impact market share[51]. - The company has not identified any cybersecurity threats or incidents that have materially affected its business strategy or financial condition[77]. Corporate Governance and Management - The Board of Directors consists of five members, with three being independent according to NASDAQ standards[182]. - The Audit Committee met three times during 2024, focusing on financial statement discussions and oversight of independent auditors[191]. - The Compensation Committee met once in 2024 to review executive compensation and employee benefit plans[192]. - The company has made diversity a goal, moving from a 100% Caucasian, 100% male Board to three Asian directors, two of whom are female[197]. - The company is dependent on key personnel, and any loss could adversely affect its ability to implement its business plan[180]. Stock and Shareholder Information - The Company issued 5 million shares of common stock valued at $6.25 million as consideration for an asset acquisition, with a fair value of $4.05 million assigned to machinery and equipment[103]. - The Company has approximately 400 holders of record of its common stock as of December 31, 2024[89]. - The Company received a deficiency notice from NASDAQ in 2024 for failing to maintain the required $1 bid price, with a compliance deadline of April 21, 2025[90]. - The Company did not pay any cash dividends during 2024 or 2023 and has no plans to do so in the foreseeable future[90]. Executive Compensation - In 2024, the Chief Executive Officer Frank Cesario received total compensation of $335,500, which includes a salary of $250,000 and stock awards valued at $85,500[204]. - Jana M. Schwan, the new Chief Executive Officer, received total compensation of $297,657 in 2024, with a base salary of $239,500 and stock awards of $48,657[204]. - The Company adopted an Executive Compensation Recovery ("Clawback") Policy in 2023, allowing recovery of performance-based compensation under certain conditions[202]. - Mr. Cesario's employment was terminated in November 2024, while he remains a Director[206]. - Ms. Schwan's employment agreement includes a base salary of $275,000 and a performance-based bonus of $250,000[208].
Yunhong Green CTI(YHGJ) - 2024 Q4 - Annual Report